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Click to edit Master title style<= /div>
Asia-Pacific Policy Center  ------=_NextPart_01C5EE88.E2E0E680 Content-Location: file:///C:/27364513/PictureofInequityinthePhilippines_files/master05.xml Content-Transfer-Encoding: quoted-printable Content-Type: text/xml; charset="utf-8" ------=_NextPart_01C5EE88.E2E0E680 Content-Location: file:///C:/27364513/PictureofInequityinthePhilippines_files/master02.htm Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
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Ä‹#› <= /div> ------=_NextPart_01C5EE88.E2E0E680 Content-Location: file:///C:/27364513/PictureofInequityinthePhilippines_files/pres.xml Content-Transfer-Encoding: quoted-printable Content-Type: text/xml; charset="utf-8" ------=_NextPart_01C5EE88.E2E0E680 Content-Location: file:///C:/27364513/PictureofInequityinthePhilippines_files/slide0003.htm Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii" Picture of Inequity in the Philippines
Asia-P= acific Policy Center 
= Inequality in the Philippines:
A Situationer
Rosemarie G. Edillon
Asia-Pacific Policy Center
18 November 2005
I would like to = thank and congratulate the organizers of this very important and timely forum.  As a researcher, I am honored to= be presenting before a distinguished audience.  But as somebody who loves this country, preparing and doing this presentation is a somewhat depressing t= ask.
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Asia-P= acific Policy Center
Outline of Presentation
3D=Background – Growth and Poverty
•
3D=Inequality Profile
Ä
3D=Why address inequity
My presentation = is organized as follows:  I will begin wi= th a very short background on how we have fared with respect to growth and poverty,  After that, I will characterize the inequality profile in terms of three aspects.  I will end with a brief discours= e on why we need to address inequity NOW.
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charset="us-ascii" Picture of Inequity in the Philippines
Asia-Pacific Policy Center<= /i>
Growth and Poverty Profile
1.5
0.7
4.0
3.5
2000-03
-2.4
-1.2
3.6
2.8
1997-00
7.0
6.8
5.6
5.1
1994-97
3.8
1.2
2.9
2.2
1991-94
Change in FGT(0) in (-) ppt=
Ave change in <= /span>per capita spending
Ave.
GNP growth rate
Ave.
GDP growth rate
 Period
This table shows= the average growth rates in output, measured by both the GDP and GNP, the correspondi= ng change in per capita spending and the observed reduction in poverty incid= ence over the period 1991-2003.  I subdivided the periods into 3-year intervals, coinciding with the FIES and somewhat with regime changes.
We started the p= eriod with a poverty incidence of 36.4% (not shown on the table).  By 1994, this was reduced by 3.8= ppt, reduced further by 7 ppt in 1997 to 25.2%. This achievement resulted, in part, from modest yet sustained, and then later fast growth of 2.9 and 5.= 6%, respectively.
We were brought = a few steps backward due to  the Asian Financial Crisis and El Nino so that by 2000, poverty incidence rose by 2= .4 ppt to 27.6%
We have, thus fa= r, regained output growth momentum, but we have not yet regained lost grounds with respect to poverty reduction.  By 2003, poverty incidence is slightly lower (26.1) but still not reaching t= he levels in 1997.
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Asia-Pacific Policy Center<= /i>
0.4174
0.4286
0.4126
Gini index
0.4814
(official)
0.5135
0.5030
0.5153
0.80
0.3076
0.2975
0.3073
0.60
0.1608
0.1590
0.1663
0.40
0.0616
0.0613
0.0649
0.20
2003
1997
1991
p
L(p)
Inequa= lity profile – 1991, 1997, 2003
This table shows= the general income inequality profile during 1991, 1997 and 2003.  The Gini is given in the last two rows.
We can observe t= hree things:
Our Gini index i= s quite high, by international standards.  Of course, there are methodological differences, so I would rather compare its value over time.
1.Although the inequality in 2003 improved, it is still not an improvement when compared against 1991 figures.  This holds whether we are lookin= g at the summary inequality measure, or looking at values under the Lorenz cur= ve corresponding to the lower part of the income distribution.
2.The highest (worst) inequality is observed in 1997, after a peri= od of sustained, then fast output growth.
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Asia-Pacific Policy Center<= /i>
Unequal benefits from growth
This chart expla= ins the increased inequality observed in 1997.&n= bsp; This is what we call a growth incidence curve.  It plots the percentage increase= in per capita spending on the vertical axis for each percentile of the income distribution.  Note the red = curve.
We make the foll= owing observations:
The curve is con= sistently positive, meaning that everybody experienced growth during the period.
1.Most of the curve is below the average growth line, given by the= green line, except at the very high end of the distribution.
2.The growth rates experienced by the poor percentiles are lower t= han those experienced by the richer percentiles.
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Asia-Pacific Policy Center<= /i>
Inequality profile – 2003 vs 1= 997
73
Increased
4
Remained the same
23
Decreased
Percent distribution of provinces where the Gini Index
Again, we show i= nequality levels over the years.  This profile is based on Gini indices observed per province.  This table unmasks a disturbing = trend that the average Gini does not show.   It says that between 1997 = and 2003, we see worsening inequality (increased Gini) in almost 3 out of eve= ry 4 provinces.
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Asia-Pacific Policy Center<= /i>
Inequity in Outcomes
100
18
Pop’n with acc= ess to safe water
14
0.5
Underweight preschoole= rs
30
10
&#= 13;
73
51
<= /div>
Maximum
Minimum
Outcome
Now, let us look= at more concrete manifestations of inequality.&n= bsp; This, I already labeled inequity in outcomes.  This is taken from the latest PH= DR.
First, looking a= t the human development outcomes:
Life expectancy = at birth ranges from a low 51 years to a high of 73 years.
Probability of n= ot surviving to age 40 can be as good as 10% or as bad as 30%.
Population with = access to safe water—in one poor province, we find only 18% enjoy this, in another we find that 100% enjoy this amenity.
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Asia-Pacific Policy Center<= /i>
Inequity in Outcomes (contd)
99.8
77.1
school enroll= ment rate (%) 2002&#= 13;
83.1
20.0
graduate 2003=
97.3
57.1
Adult functional literacy r= ate
Maximum
Minimum
Outcome
We continue̷= 0;
Adult functional= literacy rate – 57.1 to 97.3%
But you can hard= ly get anywhere with just being functionally literate.
% high school gr= aduate – from a low of 20% to a high of 83.1%
Note that these = figures are way below the recorded enrolment rates.
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Asia-Pacific Policy Center<= /i>
Why address Inequity?
ÄBecause it is the right thing to do
Ä
ÄToo much inequality stifles growth
Ä
ÄInequity fuels frustration
•
Why address ineq= uity?
   I would like to submit three reasons:
1. Because it is= the right thing to do
2. Because too m= uch inequality stifles growth
3. Inequality fu= els frustration
I will not belab= or the first point.
------=_NextPart_01C5EE88.E2E0E680 Content-Location: file:///C:/27364513/PictureofInequityinthePhilippines_files/slide0015.htm Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii" Picture of Inequity in the Philippines
Asia-Pacific Policy Center<= /i>
Inequality stifles growth
82% of
 provinces
18% of provinces
In a recent stud= y we conducted, we found a quadratic  relationship between  the initial Gini coefficient of a province and its real income growth.  This means there is a threshold = beyond which the relationship becomes negative.=   We have determined that threshold level, and then we looked at the Gini coefficients as computed in 2003.&n= bsp; The model says that this will have an impact on future real income growth.  The result is that = we find 18% of provinces below the threshold and 82% (more than 4 out of eve= ry 5) provinces above the threshold level.&= nbsp; Therefore, for the great majority of provinces, the growth strategy should include strategies to reduce inequality
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Asia-Pacific Policy Center<= /i>
= Hate-creating
“stories”
= Believes w/o
Verifying story
Verifies story
= Joins armed
movement
= Does not join
Armed movement
= Does not join
Armed movement
= Relative deprivation =
Frustration
Previous injustice
Cost of verification
= Cost vs. Benefits
Of joining struggle
Unders= tanding the Causes of Armed Conflict
The third reason= why inequity should be addressed is because it fuels frustration, leading to aggression.  This is the the= me of the PHDR.  For the background study, I used this simple framework.&nbs= p; There are persons or movements that spread hate-creating stories a= bout government.  Now, those who = heard the story can either believe it without verification, or verify the story.  If they do verify, we assume that this will be found to be false and therefore, they will not j= oin the armed movement.  This be= havior of verifying depends on their perception of being deprived relative to others, other sad experiences, and the cost of verification.
Now, for those t= hat believed the story without verification, some will join the armed movement, others will not.  This is determine= d in large part by the costs and benefits of joining the armed struggle.
We found empiric= al basis to support this framework
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Asia-Pacific Policy Center<= /i>
61
0.1969
0.0353
0.0000
ADULT_ED
752
0.8192
0.0288
-0.4313
D_WATER
246
0.8177
0.0867
-0.6512
D_ELECT
CV (%)
Maximu= m
Mean
Minim= um
Relative deprivation in <= span style=3D'position:absolute;top:35.0%;left:8.42%;width:22.28%;height:5.25%'= >access to
What causes their frustration and feeling of relative deprivation?
What really caus= es their frustration and feeling of relative deprivation?  We only highlight three, related= to access to facilities:
1.Electricity
2.Water
3.Education facilities
The figures repr= esent disparity in access between those in the “majority”  municipalities and the “minority” municipalities, in the same province.  A positive and large value indic= ates a greater disparity against the minority province.
With respect to = access to electricity, the disparity can be as high as 82%, access to water, also 8= 2%.
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Asia-Pacific Policy Center<= /i>
Broad Strategies to Reduce Poverty
3D"*"Sustain= ed economic growth
3D"*"
3D"*"Increase ability of the poor to benefit from growth
3D"*"
3D"*"Address vulnerabilities to poverty
Let me end by go= ing back to basics.  Let us recall that = the strategies to reduce poverty fall neatly into 3 broad classifications:  sustained economic growth, incre= asing the ability of the poor to benefit from growth, and addressing vulnerabilities to poverty.  I think we should not compartmentalize our strategy but take a closer look = at how we can marry the strategies, especially  the first two.
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Asia-Pacific Policy Center<= /i>
Why address Inequity?
ÄBecause it is the right thing to do
Ä
ÄToo much inequality stifles growth
Ä
ÄInequity fuels frustration
•
 Let me go back to the reasons, th= at I earlier cited, as to why we should address inequity.  Note that I can easily paraphrase these three reasons and they will neatly summarize the core aspirations of every civilized society:
1. JUSTICE
2. PROSPERITY, and
3. PEACE
   Thank you very much for your attention.

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Ä‹header› <= /div>
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Second level
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=
I would like to thank and congratulate the organizers of this very important and timely forum.  As a researcher, I am honored to = be presenting before a distinguished audience.  But as somebody who loves this country, preparing and doing this presentation is a somewhat depres= sing task.
=
My presentation is organized as follows:&nbs= p; I will begin with a very s= hort background on how we have fared with respect to growth and poverty,  After that, I will characterize the inequality profile in terms of = three aspects.  I will end with a brief discourse on why we need to address inequity NOW.
=
This table shows the average growth rates in output, measured by both the GDP and GNP, the corresponding cha= nge in per capita spending and the obser= ved reduction in poverty incidence over the period 1991-2003.  I subdivided the periods into 3-year intervals, co= inciding with the FIES and somewhat with regime changes.
We started the period with a poverty incidence of 36.4% (not shown on the table).  By 1994, this was reduced by 3.8 = ppt, reduced further by 7 ppt in 1997 = to 25.2%. This achievement resulted, in part, from modest yet sustained, and then later fast growth of 2.9 and 5.= 6%, respectively.
We were brought a few steps backward due to&= nbsp; the Asian Financial Crisis= and El Nino so that by 2000, poverty incidence rose by 2.4 ppt to 27.6%
We have, thus far, regained output growth momentum, but we have not yet regained lost grounds with respec= t to poverty reduction.  By 2003, poverty incidence is slightly lower (= 26.1) but still not reaching the levels= in 1997.
=
This table shows the general income inequality profile during 1991, 1997 and 2003.  The Gini is given in the last two rows.
We can observe three things:
Our Gini index is quite high, by international standards.  Of course, there are methodological differences, so I would rather com= pare its value over time. <= /div>
1.Although the inequality in 2003 improved, it is still not an improvement when com= pared against 1991 figures.  This h= olds whether we are looking at the sum= mary inequality measure, or looking at values under the Lorenz curve corresponding to the lower part of the income distribution.
2.The highest (worst) inequality is observed in = 1997, after a period of sustained, then= fast output growth.
=
=
This chart explains the increased inequality observed in 1997.  This is what we call a growth incidence curve.=   It plots the percentage in= crease in per capita spending on the vertical axis for each percentile of the income distribution.  Note the red curve.
We make the following observations:
The curve is consistently positive, meaning that everybody experienced growth during the period.
1.Most of the curve is below the average growth = line, given by the green line, except a= t the very high end of the distribution.
= 2.The growth rates experienced by the poor perce= ntiles are lower than those experienced = by the richer percentiles.
=
Again, we show inequality levels over the years.=   This profile is based on G= ini indices observed per province.  This table unmasks a distu= rbing trend that the average Gini does not show.   It says that between 1997 and 2003, we see worsening inequa= lity (increased Gini) in almost 3 out = of every 4 provinces.
=
Now, let us look at more concrete manifestations of inequality.  This, I already labeled inequity in outcomes.&n= bsp; This is taken from the lat= est PHDR.
First, looking at the human development outcomes:
Life expectancy at birth ranges from a low 51 years to a high of 73 years.
Probability of not surviving to age 40 can be as good as 10% or as bad as 30%.
Population with access to safe water—in one poor province, we find only 18% enjoy this, in another we find t= hat 100% enjoy this amenity.
=
We continue…
Adult functional literacy rate – 57.1 to 97.3%
But you can hardly get anywhere with just being functionally literate.
% high school graduate – from a low of 20% to a high of 83.1%
Note that these figures are way below the recorded enrolment rates.